Personal philanthropy is on the rise, even in a country like the United States, which is still experiencing difficult economic times. In 2011, in the US, it accounted for almost 300 billion dollars. We often hear about the big donors like Bill Gates and Warren Buffett but new approaches to philanthropy, including crowd-funding, are making it easier for ordinary individuals to give. But it’s not just about money - increasingly more people are donating both their skills and time.

Transcript

Antony Funnell: Maybe it’s just the way my mind works, but whenever I hear the word ‘philanthropist’ I immediately think about the late nineteenth century and America and the great steel and rail industrialists like Carnegie and Rockefeller.

Hello, Antony Funnell here, and welcome to Future Tense.

Nowadays, I guess, there’s the likes of Bill Gates and Warren Buffett. But that notion of the super-rich philanthropist is by no means the full story of philanthropy, and it can tend to obscure the millions of ordinary people who give time and money to a good cause each year.

For instance, there are more than 700,000 not-for-profit organisations in Australia, while in the US in 2011, charitable giving was estimated at around $300 billion—yes, billion.

So it’s certainly important, but is the nature of how people are giving changing in the twenty-first century? That’s what we want to explore today.

Beth Steinberg: Philanthropy used to be looked at as something that only quite wealthy people could engage in, and many people—even if they gave small amounts of money—would never think of themselves as philanthropists. And now I think that’s changed. I think many people have gotten involved in either large ways… in helping other people or trying to not only use their financial assets, but also their work skills into philanthropy.

And I actually think the two biggest things that have changed is, number one, the amount of people that are involved, and kind of the democratisation of philanthropy, and then also many more people who are getting involved from a time perspective and using some of the skills that they perhaps use in the workplace and transferring those to philanthropy, to actually help in a hands-on way and not just writing a cheque.

Antony Funnell: Beth Steinberg there, outlining two of the major changes we’ll look at in this program. And Beth is a philanthropist herself, as well as a board member with a group called Social Venture Partners International. We’ll hear more about them shortly. But given the global economic condition, just why is philanthropy once again on the way up?

Beth Steinberg: I think certainly younger generations may be modelling the behaviour of their parents. I think also people see that there’s a lot of issues in the world and they have the feeling that they not only have a responsibility to try to help with those things, but also they have the capacity to try to help with those things. So I think much of that has spurred this on. I also think in the US school system more and more children at a younger age as part of their curriculum are asked to do service hours and asked to do special projects around service, and I think that has really given rise to people starting at a younger age doing philanthropy.

I also think that programs… we have many programs in the US that have been team sports or individual sports like running a marathon while raising money for a certain cause. And I think the phenomenon of kind of doing something for yourself while also doing something for others has really made a bit impact in the numbers of people getting involved. That’s why things have grown significantly.

Antony Funnell: We have also seen in the past 10 and 20 years—certainly in western countries—we’ve seen rhetoric, political rhetoric, where governments are talking more and more about moving away from involvement in the social sector…

Beth Steinberg: Yeah, true.

Antony Funnell: …and people taking more responsibility within society for their community. Has that played a part in this?

Beth Steinberg: Absolutely. I mean, I think that as budgets get cut, as less and less money goes to entitlements, people do get involved and try to make a change in different ways, either through perhaps their religious affiliation or other things. And there’s obviously a huge history in the US of people giving their time from things like the Peace Corps to Teach for America, so lots and lots of ways that the government has supported people getting involved, but also through not just a giving but getting people at a college age or a young age getting access to programs where they can do things like pay back their student loans if they give time to certain communities in need.

And then I think, you know, I just generally think that while certainly the United States has gone through significant shift in our economics, I think that many people still understand that if you look at our lives compared to many other people in the world that they’re absolutely amazing and that they have a responsibility to give back. And I think people take that very seriously.

Antony Funnell: And yet a common criticism of our current age is that we’re a much more selfish age than previous generations, that we’re much more interested in ourselves.

Beth Steinberg: Yeah, and you know, I don’t actually find that to be true. I mean, I think maybe it’s the circles that I’m involved in, but most people that I know are somehow involved in some sort of community service, whether it’s writing a cheque, whether it’s getting involved in their children’s schools, whether it’s getting involved in their church community or their synagogue community. You know, most people that I know are somehow involved.

(Music)

Louise Walsh: Hi, I’m Louise Walsh and I’m the chief executive officer of Philanthropy Australia. It’s the membership peak body for donors and philanthropists and trusts and foundations in Australia; that is, people and corporates who are very structured and strategic about their giving and philanthropy.

I have a fair bit of experience and knowledge about this growing phenomenon in Australia of crowd funding. It’s an online giving platform to enable folks to donate and support projects and individuals to achieve their dream. It could be to help a band, for instance, fund the recording of a CD.

The scale globally, as some of you may know, is already huge, especially in the US. Kickstarter is one of the biggest crowd funding brands: US$1.5 billion was pledged in 2011—three times the amount in 2009. Pozible is the main crowd funding site in Australia at the moment and $5 million was pledged since May 2010.

The thing about crowd funding that is exciting is it’s not just about raising funds; there’s huge potential to actually help the likes of a band, for instance, build its audience. So it’s not just about raising money. You can actually offer rewards for people donating, so it attracts a different type of audience than traditional donor markets. The power of social media is key to success and it means that you could reach people you might have never reached before.

We’d love to see more matched funding. ScreenWest in WA, for instance, is offering some matched funding: $3 for every $1 raised through Pozible for WA film eligible projects.

The other thing about crowd funding of course is that it doesn’t attract tax deductibility, which of course can be an attraction for some donors. It could be in the future that crowd funding in Australia could actually attract tax deductibility and we’d love to actually see governments look at that as an option in the future.

Antony Funnell: Louise Walsh from Philanthropy Australia and she followed Beth Steinberg.

Now, Louise has very nicely done two things for us. She’s introduced us to the growing interest in crowd-funded philanthropy and she’s also highlighted the fact that personal philanthropy in the United States is unique in many ways. Most other advanced western nations, like Australia, have far lower levels of personal giving than the US, because their governments provide a greater safety net for citizens. And the figure Louise mentioned there for crowd funding illustrated that. But, of course, that’s not to say that the US isn’t leading the way, setting the trend. Let me now introduce you to this person:

Desiree Vargas Wrigley: I am Desiree Vargas Wrigley and I am the CEO and cofounder of GiveForward.com.

Antony Funnell: And GiveForward is an interesting online philanthropy project run out of Chicago. Essentially, GiveForward is a medical fundraising site that allows individuals to set up a donation page and then start using social media to solicit funds for a good cause. Desiree Vargas Wrigley:

Desiree Vargas Wrigley: The original idea for GiveForward really started out of Hurricane Katrina that hit the US in 2006. I was frustrated that there wasn’t an easy way for me to give directly to families that were trying to rebuild. And so I thought, ‘Why can’t we do this online?’ And my partner Ethan Austin and I launched the company in August of ‘08 and when we did, we were struggling to get fundraisers on the site in the beginning. But in the Spring of ‘09 we had two sisters come onto our site that were trying to raise money so that the younger sister could give the older sister one of her kidneys. And the girls raised over $30,000 in 30 days on GiveForward. And that really opened our eyes to how important a need there was out there to help middle class families who are struggling to pay really big medical bills.

Antony Funnell: Because we’re used to big institutions, aren’t we—big charities, big philanthropic institutions—raising money from the public, but in a sense the sort of tools that you’ve developed, they make just ordinary people into philanthropic organisations, don’t they? They give ordinary people the ability to use crowd funding techniques to raise money.

Desiree Vargas Wrigley: Exactly. So sites like GiveForward really empower individuals to harness or mobilise the generosity of their personal networks to help them through a difficult time. And on our site we’ve seen people raise as much as $300,000 to help with procedures, so it really is a powerful instrument for uniting friends and family around a loved one in need.

Antony Funnell: And people are using, then, social networking platforms and online tools, then, through GiveForward, to raise money and to raise profile for an issue within an existing community, within the community of their friends. Is that correct?

Desiree Vargas Wrigley: Exactly. And one thing I want to point out that is unique to GiveForward within the crowd funding space is that usually it’s not the patient who’s going on to our site and asking their friends and family for money; it really is more about a close friend or a family member who recognises that that patient is struggling and then wants to do something to help. So they come to GiveForward, they create that page, and then they spread it to friends and family all over the country with this message of, ‘Let’s band together and help this person that we love get through this very difficult time.’

One thing that people abroad might not realise is that in the US even with health insurance the average cost of cancer in the first year of treatment is $8500 for an individual. And a recent study in the US showed that over 50 per cent of Americans can’t come up with $2000 in a pinch, so that means there’s a really big gap between what people can afford and what our healthcare actually costs us. And GiftForward is what helps fill that gap.

Antony Funnell: And your service focuses specifically on medical issues because of the problems that we all know about in the United States with healthcare.

Desiree Vargas Wrigley: When we first started GiveForward it was to help people raise money for anything, and when we started to focus on medical, we started to understand how big that market really is. And in the US, Americans spend $363 billion a year in out-of-pocket medical expenses. So it’s a really huge factor in American finances.

Antony Funnell: Why should somebody, though, use the service that you provide? Why can’t people just do this themselves? Why can’t they set up their own campaign, if you like, to raise money for a cause online? What do you add to their individual efforts?

Desiree Vargas Wrigley: Sure, so anyone can go and create a blog with a PayPal button, and people have done that for years, since blogs and PayPal buttons have existed. I think one of the big things that GiveForward helps do is we lend legitimacy to the fundraisers on our site, that on GiveForward there’s a lot of transparency: you see the messages and when someone leaves a donation you see how much progress they’ve made towards their goals, and you can see through their social graph how they’re connected to people. So there’s a lot more colour around who this person is and what they’re about. And since we’ve added a blogging component and an events component… and there’s just all these different features that make it just a really socially rich experience.

If you raise $500 you’re helping that family in a difficult moment. You can help pay half of someone’s mortgage. So we don’t really focus on the goals as much as other sites like Kickstarter, but we do see that typical fundraising goals range between $10,000 and $20,000 and the average medical fundraiser on our site raises about $5000. So it’s kind of a moving target, but people raise usually about 50 to 75 per cent of their goal.

(Music)

Brad: Hi, this is Brad from Minneapolis-St Paul in the American Midwest. As a regular international podcast listener and Twitter follower, I see Future Tense as society’s rethink. Future Tense stories ask us to rethink or reimagine many things we do. I love the continued focus of stories on innovation. This is Future Tense on RN.

Antony Funnell: Now, I hate jargon, so forgive me for this, but one of the buzz terms in the philanthropic sector at the moment is ‘collective action’.

I mentioned earlier that Beth Steinberg, our first guest, was a board member of an organisation called Social Venture Partners International. Well, Social Venture Partners is about promoting collaborations between all sorts of groups in the service of a philanthropic goal. It’s a US body, but its CEO is an Australian named Ruth Jones, a former general manager of Philanthropy Australia. Ruth Jones:

Ruth Jones: I mean, the fact is that there’s not enough money and the fact that there’s not enough money has encouraged people to think, ‘OK, well how are we going to use collaboration, cooperation, human and intellectual and social capital, to try and deal with these problems?’

Antony Funnell: So this idea of collective action is what? It’s an attempt to make the philanthropic sector less siloed?

Ruth Jones: Yes, I think that’s true. I mean, philanthropy, there are so many organisations—large, small, everything in between—all working on different aspects of a social issue. And collective action, which is a very big trend in many US cities and which many philanthropic organisations are getting involved in, it’s a hard process. It means bringing together as many as 70 players in a specific issue.

Let’s say our goal is to increase high school completion rates. So in some cities, in Portland, where some of our partners are engaged in this, they’re bringing together 70 organisations to agree on a set of common goals—who will work in what area, how they will collaborate effectively, how they will measure their progress. It’s an enormously time-intensive process upfront, but it’s a very long-term one. It’s actually setting in place the structures that will get the important players working together effectively over the long term. So that’s a very important trend at the moment.

Antony Funnell: And to make collective action work, I presume, then, as you say, there is a lot of work just defining, say, responsibilities—who is going to take what action and who is going to be funded in what ways from that central pot of money.

Ruth Jones: Exactly. It’s a question of getting the players to agree on a goal and what their role will be in working towards that goal and what their short, medium and long-term performance indicators will be and where the funders fit with that. So it is. It’s a very time-intensive process that requires a lot of convening and facilitation, and a lot of consensus decision-making.

But the cities which have been working on collective action initiatives for the last several years, they are starting to see upward trends in the goals that they have set for themselves. So it’s being picked up and discussed right across the United States.

Antony Funnell: And is collective action being used for a broad range of philanthropic purposes, or are there certain areas where it seems to be more applicable?

Ruth Jones: I’d say that initially it started with education, but it’s really moved. I know that there are initiatives now for affordable housing, different aspects of education—there’s high school completion rates, there is getting kids ready for kindergarten, getting kids reading age-appropriately by third grade. So initially in education, but now the collective action movement is moving through a whole range of social issues.

Antony Funnell: And importantly, when you talk about this idea of collective action, you’re not just talking about money, are you? You’re talking about investments in what’s sometimes called ‘social capital’, I guess—human beings.

Ruth Jones: So, there are sort of three legs to the philanthropy stall. The first leg is finance, financial capital, which the philanthropists can provide. The second is program capital, which the non-profits bring with them; they’re the ones who know, who have developed the programs and the expertise to deal with certain target audiences, certain social issues. And the third is the human and social capital that people can bring to an issue. And you have to fully exploit all three in order to be able to have any significant impact on big social issues.

My network is about 2400 people in about 29 cities. In each city, a group of individuals pool their funds, they decide by consensus what issue they are most interested in, they run a grant cycle and then they choose and work very intensively for three to five years with a small number of non-profits. And our goal is always the same: it’s to make sure that that organisation is in the best possible shape to carry out its mission. And when I say ‘in its best possible shape’, we want that organisation to have strong mission, vision and planning, to have strong governance, great marketing and communications, good information systems, healthy financial planning and record keeping, good HR policies—everything that one needs in order to be able to put one’s best efforts out there.

So the shorthand for that, Antony, is ‘capacity building’. We build the capacity of promising non-profits with the goal of them being more effective players out there.

Antony Funnell: And does that structure, then, also provide the companies that are giving the money, or the individuals who are providing the funds, does it also give them an insurance policy, in a way, that they know that their gift is likely to be used in a far more effective and responsible way?

Ruth Jones: Well, I mean, you’ve answered the question. First of all, it’s not companies; my members are individuals. Now, $5000, which is the minimum that they contribute each year—you know, it’s a good sum, but you are, as an individual donor, you’re very unlikely to feel that you’ve made any significant impact on any specific social issue or problem, contributing $5000.

But if you’re one of a group of 50 people contributing $5000 then you actually can begin to have some impact on an organisation and possibly on some of the social issues in your community. So we’re about pooling the money so that you can leverage everybody’s dollar to best effect—and not just pooling the money, but pooling everybody’s professional skills and experience.

So let’s say, Antony, that you were a partner of Social Venture Partners in Seattle, where I’m based. You would be brought in to work with a great non-profit here on improving their communications. And that would be something that would be frankly more valuable to that organisation than the money that you could probably contribute.

(Music)

Antony Funnell: A point of clarification: while crowd funding and so-called collective action arrangements are both notable and substantial trends in the giving sector, as we’ve heard, even Ruth Jones acknowledges that they by no means dominate. Paths to the future perhaps, but the overwhelming amount of philanthropic giving in western countries is still channelled through traditional charitable organisations. And for at least the last decade or so those organisations have been dealing with the third and final trend I want to explore today—the corporatisation of the charitable sector.

Bill Gates (archival): Saving lives is not easy. Sometimes we don’t know how to prevent disease or death, which is tragic. But there are millions of lives we know exactly how to save. We can save them easily and cost effectively…

Antony Funnell: Spurred on by the example of Bill Gates and the enormous charitable foundation he’s established, many philanthropic organisations have been under pressure to start acting more like companies, to take on a corporate approach to their work. But Mike Edwards from the research and advocacy group Demos, and the author of the book, Small Change: Why Business Won’t Save the World, believes that push has been misguided and counterproductive.

Mike Edwards: Well, you know, it’s interesting; the original meaning of philanthropy is ‘love of humankind’, and we’ve sort of migrated 360 degrees away from that to almost a love of money, particularly big money. But originally philanthropy was there to fund things that wouldn’t be funded either by government or by the market, by business, because they didn’t make a return on investment. So it was there to do all the really difficult stuff, if you like, to take on the really deep-rooted challenges of racism or sexism or inequality and so on that governments and business were never going to solve by themselves.

Sometimes the headlines tend to get dominated by what the rich and famous are doing and we forget that the majority of philanthropy is still given by ordinary people to causes they believe in, with no thought of making a return or employing business techniques. So what happened is I think because of the arrival of almost rock star philanthropy, including Bill Clinton and Bill Gates and all the others, the debate has tended to be distorted by what they’re doing. That’s why there’s so much attention to their particular way of doing things around business models, but I wouldn’t say it’s representative of more than, I don’t know, 10 per cent of philanthropy in total.

Antony Funnell: And the major problem that you see with adopting that business approach?

Mike Edwards: Well, there are two problems. The first is—I guess in the form of a question: who wins and who loses? Because it’s very unlikely there’s someone who’s out to transform society or hold corporations accountable or even develop community organising, venture in their community will be funded by investors in the marketplace. It’s not something they care about; they want short-term return on their investment and quick material results. So they fund things like social service provision, housing, medical stuff—not unimportant, but the problem is if money migrates only to those things—as it would do if you had a market; money would flow to those easier causes—we may actually be neglecting the most important areas of philanthropy and society.

The second problem is whether you want a democracy, because when you privatise, marketise, commercialise something, you effectively take it out of the public domain, don’t you? And therefore the prospects for democratic accountability and decision making wither away and they’re replaced by markets and decisions in the marketplace. So societies have to decide do they want their health and education systems, their social services, care for the disabled, everything else that philanthropy funds, to be decided in that way, where we as citizens really have no say over the future of public policy. So when you privatise something and put it in the marketplace, the citizenry of the country is losing something very important to a democracy and I think that’s very bad.

Antony Funnell: One of the arguments that people put in favour of adopting a more corporate approach to philanthropy is the idea that it provides not-for-profit organisations with benchmarks to which they can gauge the success of their operation. Isn’t that a good thing in itself?

Mike Edwards: Well, benchmarks are a good thing, but it’s nothing to do with a business approach. Successful non-profits, social movements, have had benchmarks for a hundred years or more. The anti-slavery movement had a benchmark and it succeeded very well. The civil rights movement was full of benchmarks; it changed the world. But none of these organisations or movements had anything to do with business thinking. So, yes, benchmarks are essential to any successful organisation, but that’s a completely different question to adopting a business-like approach.

Antony Funnell: Now, we’ve seen in the last five to ten years the rise of dot.com philanthropists like Bill Gates. That—I take it from what you’ve said—that’s been a big part of this change in attitude, has it?

Mike Edwards: It has. You know, lots of energy, lots of money, lots of new ideas, innovations, a sort of can-do spirit from Silicon Valley is one of the major driving forces. And in some areas—you know, vaccine research, for example, treating diseases, new drugs, drought-resistant seeds—you know, that sort of approach is very effective.

But writing software is not the same as solving deep-rooted complex problems in your community. It’s a radically different set of problems, a different way, I think, of doing your work. So what works in Silicon Valley doesn’t necessarily work in lots of areas of social change, and we need to remember that. At the moment we have a lot of energy, and I have to say a bit of arrogance as well, from Silicon Valley billionaires who think, I think, that they can solve social problems in exactly the same way that they made their fortunes writing software and developing new technologies. But that simply isn’t the case.

Antony Funnell: Mike Edwards, from the research and advocacy group Demos. And his caution about the dangers of corporatising the philanthropic sector is also shared by Dr Wendy Scaife, a senior research fellow with the Australian Centre for Philanthropic and Non-Profit Studies.

Wendy Scaife: I guess I come from a not-for-profit background myself and so I’d like to sort of make comments on both positives and negatives. An organisation that I’ve worked for was a small organisation, very effective in its own area, had some great programs, but there was great need nationally. And for it to go national, it really needed to be more business-like; it needed to be able to find likeminded groups in other states and to grow them and to be able to become… ‘slick’ is the wrong word, but professional enough to be able to work, for instance, to win the corporate dollar. The corporate dollar is one that will go to organisations that are not just doing good things in the community, but organisations that can take a corporate brand and look after it and extend the value of that brand by being professional in what they do on top of the excellence in delivering on their mission.

So there are occasions where we have been able to generate more dollars from the corporate community by organisations stepping up and doing the ‘when in Rome’ thing and being able to talk reach and frequency and all of those kinds of things, and recognising that some giving markets have different triggers and different expectations and different needs.

In terms of elements that perhaps we need to exercise caution, it’s the performance measurement, it’s the ‘by COB Friday have your KPIs,’ you know. It’s the business talk; it’s the inappropriate measurement of areas that sometimes will never be well captured by business metrics. We have to stop and ask the questions, ‘Who are we measuring this for, why, and what is the appropriate way?’ Sometimes the metrics will take us in the wrong direction and they will cost an organisation more than what the grant they might have got might be. People jump on a bandwagon and they just don’t think it through.

Credits

Comments (3)

Mallick :

25 Nov 2012 1:27:09pm

Hi Anthony What a great topic for discussion today. I make miniscule payments to charity and similarly spend minimum time to participate in trying to make positive social and political change but would like to do more and your program gave me a lot of interesting points of view to think about in terms of philanthropy. I concur with your speakers who commented about the business model being applied to movements for fundraising and social interventions. Business models have been applied to TAFE where I have spent a long period of my working life to its detriment I believe. Thanks again - great program.

Dognam :

25 Nov 2012 3:58:14pm

Enjoyed the show today. It covered a wide range of information about sharing and giving.

Like Mallick, I work in the TAFE sector. We have brought awareness of crowd funding platforms in to our teaching. Crowd funding is a real world form of critique. Students present an idea and themselves online seeking funding. They learn a lot, even before having a pitch ready to upload.

Sarah :

30 Nov 2012 6:30:46am

I must admit it makes me sick to hear Yanks talk about how good they are at philanthropy. Why not use all that energy to make sure the rich pay their fair share of tax and lobby to improve the health insurance scheme.